By Dana Mattioli, Liz Hoffman and Robbie Whelan
Simon Property Group Inc. has made takeover approaches for rival
Macerich Co., seeking to combine two of the largest shopping-mall
owners in the U.S.
The latest approach came within the past few weeks, and followed
an earlier one late last year, according to people familiar with
the matter. Simon hasn't made a formal offer for Macerich, which
has a market value just over $13 billion, according to one of the
people.
It isn't clear how receptive Macerich may be to a deal, but in
recent weeks the company has been discussing a potential takeover
defense with its advisers, some of the people said.
The latest overture comes early in a March window to nominate
directors to Macerich's board, which could give Simon a pathway to
go hostile should the company rebuff its advances. Still, real
estate investment trusts like Macerich are notoriously difficult
takeover targets, in part because of various state laws that
protect them from unsolicited bids. In Maryland, where Macerich and
many other REITs are incorporated, state law affords them
antitakeover protections that can slow down hostile suitors and
limit their ability to accumulate shares without a board's
consent.
Simon in November disclosed a 3.6% stake in Macerich, a move
many investors saw as the first step to a takeover bid. The
disclosure, which sent Macerich's share price soaring to a
multiyear high, came just days after the company struck a deal to
buy out Ontario Teachers' Pension Plan's interest in five of its
highest-quality malls, for $1.9 billion. Macerich paid for the
properties in shares, handing a roughly 11% stake to the Canadian
retirement fund.
A combination of Indianapolis-based Simon and Macerich, of Santa
Monica, Calif., the country's first- and third-largest mall owners,
respectively, could give the companies more clout when negotiating
leases with store owners at a time when the industry is grappling
with declining foot traffic as more consumers shop online. It could
also help Simon expand in the West. Simon has 190 properties and a
market value of nearly $60 billion. Macerich has a portfolio of 59
shopping centers concentrated in California and Arizona.
Simon has been an aggressive acquirer of retail properties under
its Chairman and Chief Executive David Simon, a hard-charging
former investment banker who took over his family's real-estate
business in 1995. In 2007, Simon was a partner with hedge fund
Farallon Capital Management LLC to buy the Mills Corp., a rival
mall operator, for $7.9 billion. In 2012, Simon bought a stake in
French retail landlord Klepierre SA, and its European exposure
expanded further earlier this year when Klepierre bought Dutch
rival Corio NV for $9.7 billion.
Mr. Simon has had his share of rejections too. A 2002 hostile
bid for Taubman Centers Inc. was thwarted when the governor of
Michigan, where Taubman is based, signed a law aimed at protecting
REITs from unwelcome offers. A series of takeover bids starting in
2009 for General Growth Properties Inc., coming out of bankruptcy
at the time, failed as well.
Write to Dana Mattioli at dana.mattioli@wsj.com, Liz Hoffman at
liz.hoffman@wsj.com and Robbie Whelan at robbie.whelan@wsj.com
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